How Much Might Stocks Drop In the Forth-Coming Bear Market?

May 26, 2014

Irrational Delusion…Euphoric Aspirations of Wealth…Pollyannaish Myopia, Insatiable Greed and Unbridled Exuberance are terms that apply to describe investment sentiment toward US stocks today.  This perverted sentiment was pervasive during the Roaring 20s – just before the Great Crash of 1929 began.  To be sure this same addictive illusory mindset clouds investors’ common sense today. And like any abusive addiction,  it will eventually and inevitably cause the destruction of material wealth…and the US economy to boot.

Below are various forecasts and corresponding time frames from sundry Internet sources (click titles to read).

In A Few Months, The Stock Market Will Drop 15%, Then Go Nowhere For Years

Why the market could see a 17% drop in 2014

Warning: Stocks Will Collapse by 50% in 2014

Billionaires Dumping Stocks…Economist Knows Why

Stock Market Crash Coming Early 2014 WARNING!!!!

Soros doubles a bearish bet on the S&P 500, to the tune of $1.3 billion

Scary 1929 market chart gains popular traction

George Soros Bet $1.3 Billion The Stock Market Will Fall

Stocks are telling you a bear market is coming

What some well-known market pundits are saying about a possible stock market crash:

  • “The United States could soon become a large-scale Spain or Greece, teetering on the edge of financial ruin.”   --  Donald Trump
  • “The data is clear, 50% unemployment, a 90% stock market drop, and 100% annual inflation . . . starting in 2012.”  --  Robert Wiedemer
  • “2014 crash will be worse than 1987’s…as insiders are selling like crazy”   -- Marc Faber
  • Soros Fund Management had $1.3 billion worth of options at the end of 2013 that pay off if the Standard & Poor's 500-stock index falls.  – George Soros
  • “The Stock Market Is On The Edge Of A Crash.”  --  Richard Russell
  • “The U.S economy is poised for a major crash.” – Jim Rogers
  • “All the money printing (QE) is creating false hope that we are in the middle of some kind of super bull market.”  -- Jim Rogers
  • Billionaire Warren Buffett is sitting on $49 billion, his biggest cash hoard ever, according to Berkshire’s latest quarterly report. – World’s richest man
  • "If the Fed continues with their taper and ends QE, we will be back in a recession. The stock market will be in a bear market. The real estate market will be in a bear market. And then what is the Fed going to do to respond to that? The only thing it can do is print more money and restart the presses and do more QE." – Peter Schiff on CNBC
  • “Whenever A Government Says, ‘Don’t Worry, Everything’s Going To Be Fine’—That’s The Tip-Off To Worry” – Doug Casey
  • “A stock correction is coming”  -- Dennis Gartman

And what say Wall Street Brokers?  Per market analyst Adam Hamilton (Zeal Intelligence),  “Wall Street Brokers never, ever predict bear markets, as it is bad for business.  Wall Street only recognizes bear markets in hindsight…”

Can all the above market experts and recognized pundits be wrong?  I think not!!  Perhaps their timing might be in question, but the rationale, evidence and data they use supporting their considered opinion that A STOCKS BEAR MARKET LOOMS ON THE HORIZON are rational and reasonable…as most investors live in a Fantasyland Bubble inflated with Irrational Exuberance and fertilized with Insatiable Greed. 

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What the Bull Giveth, the Bear Taketh Away

Bear Market Forecast Based On Record Since 1872:

Source: Shiller (2013)

Source:  http://gestaltu.blogspot.com/2013/04/what-bull-giveth-bear-taketh-away.html

Bear Market Statistics:

The average stock market decline was -40% with an average 45 months duration...which is the premise for this analyst’s prediction.

Bear Market forecast is for stocks to fall 40% during the next 45 months:

Dow Index is predicted to fall to 9960 by July 2017.

S&P500 Index is forecast to fall to 1140 by July 2017.

Be aware that these are NOT hard and fast predictions of the future values of these stock market indices for the following reason. Bear Markets since 1872 varied from a loss of -22% (1962-1962) to -85% (1929-1932). Moreover, the Bear Market duration varied from 7 months (1962-1962) to 183 months (1881-1896).   

World famous writer John Steinbeck expressed it well:

"The study of history, while it does not endow with prophecy, may indicate lines of probability."

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Founder of Gold-Eagle in January 1997.  Vronsky has over 42 years’ experience in the international investment world, having cut his financial teeth in Wall Street as a financial analyst with White Weld. Vronsky speaks three languages with indifference: English, Spanish and Brazilian Portuguese.  His education includes a degree in Petroleum Engineering from the University of Oklahoma, a Liberal Arts degree from Hartnell College and a MBA in International Business Administration from UCLA – qualifying as Phi Beta Kappa and Tau Beta Pi for high scholastic achievements.  Vronsky believes gold and silver will soon be recognized as legal tender in all 50 US states…and many countries worldwide.  You may reach I. M Vronsky at: vronsky@gold-eagle.com and/or vronsky@bellsouth.net

A medical study in France during the early twentieth century suggests that gold is an effective treatment for rheumatoid arthritis.

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